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Fall 2010 Practice Exam 1 parrt 2 - Spring 2009 Exam 2 - answer key

# Fall 2010 Practice Exam 1 parrt 2 - Spring 2009 Exam 2 - answer key

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Variable costs have constant cost per unit. CMR = (\$200k-\$150k) / \$200k = .25 Sales_BE = \$30k / .25 = \$120,000 High activity = 950 MH; Low activity = 720 MH, so: (\$9625-\$8360) / (950-720) = \$5.50/MH Either FC (top) must decrease or CM/unit (bottom) must increase. Only B achieves this. FC = 90,000 x \$4 = \$360k and doesn’t change. So cost at 85k units is… (\$8 x 85k) + \$360k = \$1,040,000 Option 1 is pure FC Option 2 is both FC and VC Option 3 is pure VC. Answer D is only true for a low level of sales. Production Budget: Current month 48,000 + EndInv Needed (40% x 51,000) - BegInv on hand (40% x 48,000) = 49,200 Sales forecast must be completed to do the Sales Budget, which is the first budget in the Master Budget. AQxAP-------------AQxSP--------------StdAllowedxSP \$176k 80k x SP 76k x SP ?? \$9400U SP x (80k – 76k) = \$9400, so SP = \$2.35 \$176k – (80k x \$2.35) = \$12,000F DM Price Variance t of the cost driver is what distinguishes Standard Costing from Normal Costing (which uses actual amount of the cost driver). By definition. AHxSR--------------StdAllowedxSR AH x \$12 9,500 x \$12 \$6,000F -\$6,000 = \$12 x (AH – 9,500), so AH = 9,000 hours Actual VOH------AQxSR--------------StdAllowedxSR ?? AQ x \$5 (19,500 x 3) x \$5 \$21,000F \$9,000U (AQ x \$5) – (19,500 x \$5 x3) = \$9,000, so AQ = 60,300 hours Actual VOH – (60,300 x \$5) = -21,000, so Actual VOH = \$280,500 /unit stays constant. Total FC stays constant, so as volume goes up, FC/unit goes down. R 2 indicates the a lot of the variability in the cost is explained by variability in the cost driver. Wtd Avg CM = 2/3 x (\$40-\$24)+1/3(\$50-\$40) = \$14 Target Units = (\$840k + (\$73,500 / (1-.3))) / \$14 = 67,500 A = 67,500 x 2/3 = 45,000 units | …so none of the B = 67,500 x 1/3 = 22,500 units | above. AHxSR--------------StdAllowedxSR 14k x \$11 (7,500 x 2) x \$11 ?? (14k x \$11) – (7,500 x 2 x \$11) = \$11,000 F all else equal, there is less CM to contribute toward covering FC and generating operating income. the weighted average CM, thus increasing the total CM which contributes to higher operating income. DM Budget: Current month (1,100 x .5) + EndInv Needed (10% x 980 x .5) - BegInv on hand (10% x 1100 x .5) = 544 ounces And 544 ounces x \$360/ounce = \$195,840 AHxAR----------------AHxSR \$456,000 24k x \$19.20 ?? \$456k – (24k x \$19.20) = \$4,800 F Actual VOH-------------AQxSR \$77,700 18,800 x \$4.50 ?? \$77,700 – (18,800 x \$4.50) = \$6,900 F Target Units = (\$80k + (\$42k / (1 - .4))) / (\$120 - \$80) = 3,750 units So, none of the above. revenues, to make it easier to hit sales targets. osts, to make it easier to operate without exceeding cost allowed in budget. VOH has Spending Variance and Efficiency Variance. FOH has Budget Variance and Volume Variance. ld choose Option 4. It has the highest operating income. 2 points on 1: (1 point each for revised sales, VC and FC) x (\$40,000 / \$4)) + ((\$30,000 / \$3) x (\$3 + \$1)) – \$6,0000 = 000 - \$40,000 - \$6,000 = \$14,000 ion 1: (1 point each for revised sales, VC and FC) x (\$40,000 / \$4) x 80%) + (\$30,000 x 80%) – \$6,0000 = 0,000 - \$24,000 - \$6,000 = \$10,000 n 1: (1 point each for revised sales, VC and FC) 000 x 150%) – (\$30,0000 x 150%) – (\$6,000 + \$2,000) = 00 - \$45,000 - \$8,000 = \$7,000 ption 1: (1 point each for revised sales, VC and FC) 40,000 x 110%) – (\$30,0000 x 110%) – \$6,000 = 44,000 - \$33,000 - \$6,000 = \$5,000 Jan Sales of 25,000 1 point + Target Ending Inventory of 1,850 1 point - Beginning Inventory of 1,400 1 point = 25,450 bicycles carryforward of part 1 answer into part 2) els required for Jan Production (25,450 x 2) 2 points pected Ending Inventory (4,300 x 95%) 2 points inning inventory of 4,300 1 points 685 bicycles ary sales collected in February \$4,200,000 1 point ruary sales collected in March \$1,800,000 1 point al February Sales \$6,000,000 0 per bike = 30,000 bikes t February sales collected in February \$4,200,000 / \$6,000,000 = 70% 1 point 1 point February sales collected in March \$1,800,000 / \$6,000,000 = 30% 1 point 1 point yforward of percentage from part 4) es = \$4,900,000 / 70% = \$7,000,000 1 point 1 point

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Fall 2010 Practice Exam 1 parrt 2 - Spring 2009 Exam 2 - answer key

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